Highlights of Union Budget DIRECT TAX

Transcription

1 Highlights of Union Budget DIRECT TAX * Aim direct tax regime that is globally competitive * Aim at stable tax policy * To avoid retrospective tax provisions * Tax policy to curb black money, encourage Make in India * Tax exemption to individuals to continue * 30% rate of corporate tax makes cos uncompetitive * Corporate tax rate reduction to include some sop removal * To reduce corporate tax rate to 25% over next 4 yrs * Direct tax proposal to lead to loss of 83 bln rupees * Most Direct Taxes Code proposals already in income tax act * No merit in proceeding with current Direct Taxes Code * To include yoga in charitable purposes in income tax act * Individual tax payer to get benefit up to 444,200 rupee/yr * Girl child saving plan already eligible for tax deduction * Interest payment on Sukanya Smriti Plan exempted from tax * Transport allowance exemption up at 1,600 rupees/mo * Tax exemption of 50,000 rupee under 80C for pension plan * 100% tax exemption in CSR activities for Swachh Bharat Kosh * 100% tax exemption in CSR activities for Clean Ganga Fund * Tax deduction cap for health insurance up at 25,000 rupee * To apply some tax administration reform panel steps FY16 * CBDT to clarify on dividend from Indian cos' foreign arms * To gain 90 bln rupees from 2% more surcharge on super rich * 2% surcharge on income over 10 mln rupees * To replace wealth tax with 2% more surcharge on super rich * 300% penalty on concealing income * Black money holders to be imprisoned up to 10 years * Comprehensive bill this session on curbing black money * To bring 'benami' transaction bill this session INDIRECT TAX * To roll out GST on Apr 1, 2016 * Indirect tax proposal to lead to bln rupee net gain * Svc tax exemption to storage facilities of fruit, vegetable

2 * Service tax exemption on senior citizen insurance plan * To levy 2% Swacch Bharat cess on all svcs if needed * Effluent treatment plants to be exempt from svc tax * Clean energy cess on coal 200 rupee/tn from 100 rupee * To raise service tax to 14% including education cess * Excise duty on footwear below 1,000 rupees cut to 6% * Custom duty on raw materials, intermediaries to be reduced * Some change in cigarette, other tobacco pdts excise duty * General rate of educational cess being rounded off to 12.5% * Petrol, diesel excise duty incidence unchanged * To cut basic customs duty on all 22 items * Rich and wealthy must pay more tax * To cut income tax on royalty fee on tech svc to 10% * To modify permanent establishment norms for fund managers * Quoting PAN must for over 100,000 rupee purchase * Bill to curb domestic black money to be introduced * Amending definition of crime in anti-money laundering law * Customs on specified inputs used for endoscope cut to 2.5% * Special extra duty on naptha for excisable goods cut to 2% * Effective customs on select goods vehicles raised to 20% * Effective customs on 10-plus people vehicle raised to 20% * Basic customs duty on antimony waste cut to 2.5% vs 5.0% * Basic customs duty on liquefied butane cut to 2.5% vs 5.0% * Basic customs duty on ulexite ore cut to nil from 2.5% * Basic customs duty on organic LED TV panel cut to nil * Tariff rate of customs duty on bituminous coal cut to 10% * Basic customs duty on CVs hiked to 40% from 10% * Customs duty on organic LED TV panel scrapped * Tariff rate of customs on iron, steel, pdts hiked to 15% * Extended excise sop on e-vehicles till March 2016 * Special additional duty on iron, steel scrap cut to 2% * Excise duty on ambulance chassis cut to 12.5% vs 24% * Excise duty on cigarettes of other lengths hiked by 15% * Customs duty on isoprene, liquefied butane cut to 2.5% * Excise duty on sub-65 mm cigarettes hiked by 25% * Excise duty on cut tobacco hiked to 70 rupee/kg vs 60 rupee * Customs duty on sulphuric acid for fertiliser cut to 5% * Basic customs duty on metallurgical coke at 5% vs 2.5% * Basic customs duty on sulphuric acid at 5% vs 7.5% * Excise duty on ethylene polymer bags hiked to 15%

3 * Basic customs duty on upgraded Ilmenite cut to 2.5% * Excise duty on over 1000-rupee leather footwear cut to 6% * Basic customs duty on metallurgical coal raised to 5% * Excise on wafer for smart card integrated circuit cut to 6% * Effective hike in road cess on petrol, diesel 6 rupees/ltr * Excise duty on LED driver input cut to 6% from 12% * Net revenue gain bln rupees from tax changes GROWTH, INFLATION * Our objective is to keep inflation below 6% * India to take off on faster growth trajectory * Aiming for double digit growth seems feasible * CPI inflation seen at 5% FY15 end * FY18 effective revenue deficit seen 0% of GDP * FY18 gross tax revenue seen 10.7% of GDP * FY18 revenue deficit seen at 2.0% * FY17 effective revenue deficit seen 1.5% of GDP * FY17 gross tax revenue seen 10.5% of GDP * FY17 revenue deficit seen at 2.4% FISCAL HEALTH * Have concluded monetary policy framework talks with RBI * Concluded monetary policy framework pact with RBI * To set up public debt management agency * FY18 fiscal deficit rolling target 3.0% * FY17 fiscal deficit rolling target 3.5% * FY16 fiscal deficit rolling target 3.9% * Path of fiscal consolidation is on track * Aim fiscal deficit of 3.0% in next 3 yrs * To meet fiscal gap aim of 3% of GDP medium term EXTERNAL SECTOR * FY15 CAD seen lower than 1.3% * Foreign inflow since Apr 2014 above $50 bln

4 * FX reserves of $340 bln a record * To allow foreign invest in alternative invest funds * To amend FEMA Section 6 for capital flow clarity, control * FEMA Act to be amended to tackle undeclared assets abroad * 7-yr imprisonment for non-filing of return on foreign asset * Probe into undeclared foreign acct highest priority FINANCIAL SECTOR, MARKETS * Aim to fund the unfunded, bank the unbanked * States to work with NITI Aayog for unified national mkt * To launch Indian Financial Code "sooner than later" * SEBI, FMC to be merged * Autonomous bank board bureau to determine PSU bank heads * To amend RBI Act this yr for monetary policy committee * Rupee has become stronger by 6.4% vs basket of currencies * To move amendment to FRBM in finance bill * Need to deepen Indian bond market * Bank farm credit seen 8.5 trln rupee FY16 * Unclaimed EPF deposits 60 bln rupees * Unclaimed PPF deposits 30 bln rupees * NBFCs with 5 bln rupees to be institutions under SARFAESI * To promote cashless transactions to curb black money * To incentivise credit/debit card transactions * To disincentivise cash transactions INFRASTRUCTURE, INDUSTRY * Aim to make India mfg hub of the world * To introduce regulatory reform law for infra * To form panel to make draft law on ease of doing business * Plan public contract resolution bill * To set up exclusive commercial divisions in high courts * Aim sanctioning building 100,000 km of roads * Allot 250 bln rupees for rural infra via NABARD * Additional fiscal space to go to infra invest * Need to up invest in infra via PPP model

5 * Increasing invest in infra is a challenge * Mfg has declined from 18% to 17% of GDP * 100,000 km road under implementation already * PSU ports to be corporatised under Companies Act * Need to relook PPP model for infra development * To allow tax free infra bonds for irrigation projects * To permit tax-free infra bonds for rail, road projects * To set up national infra fund * National infra fund allocation to be 200 bln rupees * To bring comprehensive bankruptcy code FY16 * 5 new UMPPs to unlock 1 trln rupee investment * To set up 5 UMPPs in plug, play mode * 2nd unit of Kudankulam project to be commissioned FY16 * Plan 175,000 MW renewable energy by 2022 * Plan project development co via SPVs for mfg hub in SE Asia * Contribution to EPF should be optional below certain salary * Employees may opt for EPF or new pension plan * To create sector neutral grievance redressal body * 50 bln rupee extra to natl infra fund FY16 if tax buoyant * Pursuing Make in India towards making defence equipment * Manufacturing exports stagnant at 10% of GDP * 750 mln rupee allocation for electric vehicles FARM SECTOR * To create national farm market * Need to improve farm productivity * Aim to increase irrigated areas * Farm incomes under stress * To allot bln rupee for rural job plan * FY16 farm credit seen 8.5 trln rupees * To allot 53 bln rupees for micro irrigation plan * To support organic farming scheme * Allot 30 bln rupees for PM irrigation plan, if tax buoyant SOCIAL SECTOR, EDUCATION * Need to upgrade 80,000 senior secondary schools * To make use of 154,000 postal offices for Jan Dhan

6 * Plan universal social security system under Jan Dhan * At least 1 member of each family to have job by 2022 * To build 20 mln houses in urban, 40 mln in rural India * Electrification of remaining 20,000 villages by 2020 * Medical facility in each village essential * All our schemes have to centre around the poor * Committed to supporting jobs via MNREGA * To up MNREGA allocation by 50 bln rupee if tax buoyant FY16 * To launch National Skills Mission across 31 sectors * National Skill Mission to develop youth employability * To set up IIMs in J&K and Andhra * To set up IIT in Karnataka * To set up AIIMs in J&K, Punjab, Tamil Nadu, Himachal, Assam * To set up IT-based student financial aid authority * ISM Dhanabad will be upgraded to full IIT FY16 ESTIMATES * See FY16 GDP growth at % * FY16 capital expenditure 1.25 trln rupee * FY16 net resource transfer to states seen 5.25 trln rupee * 62% of total receipts to go to states FY16 * FY16 invest in infra seen up by 700 bln rupees * FY16 PSUs' capex seen 3.18 trln rupees * FY16 minority affairs allocation bln rupees * FY16 gross budgetary support to railways bln rupees * FY16 outlay on roads bln rupees * Allocated bln rupees for women's schemes for FY16 * FY16 allocation for ST plans bln rupees * Aim FY16 revenue deficit 2.8% of GDP * Aim FY16 fiscal deficit 3.9% of GDP * FY16 devolution to states estimated at 5.24 trln rupees * FY16 non-tax revenues 2.21 trln rupees * Revenue deficit pegged 2.8% of GDP FY16 * Gross tax receipt trln rupee FY16 * FY16 total expenditure trln rupees * Plan spend 4.65 trln rupee FY16 * FY16 non-plan expenditure trln rupees * Defence allocation 2.47 trln rupees FY16

7 * FY16 women, child allocation bln rupees * FY16 health sector allocation bln rupees * 224 bln rupees for housing, urban development FY16 * To allot bln rupee to education sector FY16 * FY16 total capital receipts bln rupees * FY16 income from dividends and profits 1 trln rupees * FY16 gilt redemption seen 1.44 trln rupees * Govt's total revenue receipts seen trln rupees FY16 * FY16 total non-tax revenue 2.22 trln rupees * Govt's total non-tax revenue seen 2.21 trln rupees FY16 * Govt's other non-tax revenue seen 944 bln rupees FY16 * FY16 centre's net tax revenue 9.2 trln rupees * Govt's interest receipts seen 236 bln rupees FY16 * Govt's dividend, profit seen 1 trln rupees FY16 * FY16 service tax receipts seen 2.1 trln rupees * Centre's net tax revenue seen 9.2 trln rupees FY16 * FY16 central excise duty receipts seen 2.3 trln rupees * FY16 states' shr of taxes seen 5.24 trln rupees * FY16 customs receipts seen 2.08 trln rupees * FY16 income tax receipts seen 3.27 trln rupees * FY16 service tax mop-up seen 2.1 trln rupees * FY16 net 364-day T-bill borrow seen 81 bln rupees * FY16 corporation tax receipts seen 4.7 trln rupees * FY16 net 182-day T-bill borrow seen 40 bln rupees * FY16 excise mop-up seen 2.30 trln rupees * FY16 gross tax receipts seen trln rupees * FY16 customs mop-up seen 2.08 trln rupees * FY16 net 91-day T-bill borrow seen 179 bln rupees * FY16 income tax mop-up seen 3.27 trln rupees * FY16 corporate tax mop-up seen 4.7 trln rupees * FY16 states share of taxes seen 5.24 trln rupees * FY16 GDP tax ratio 10.3% * FY16 pension payments seen 885 bln rupees * FY16 interest payment seen 4.56 trln rupees * FY16 spectrum, telecom receipts seen 429 bln rupees * FY16 PSU dividend 362 bln rupees * FY16 RBI surplus, PSU bank dividend 645 bln rupees * FY16 effective revenue deficit seen 2.0% of GDP * FY16 gross tax revenue seen 10.3% of GDP * FY16 effective revenue deficit 2.84 trln rupees

8 * FY16 effective revenue deficit 2.0% of GDP * FY16 revenue deficit 3.94 trln rupees * FY16 revenue deficit seen at 2.8% * FY16 securities against small savings 224 bln rupees * FY16 total subsidy seen 2.44 trln rupees * FY16 fuel subsidy seen 300 bln rupees * FY16 food subsidy seen 1.24 trln rupees * FY16 fertiliser subsidy seen 730 bln rupees * FY16 MSS provision 200 bln rupees * FY16 cash drawdown seen 120 bln rupees * FY16 nominal GDP seen 11.5% * FY16 divest mop up target 410 bln rupees * FY16 fiscal deficit seen at 5.56 trln rupees * FY16 net short-term borrowing pegged 301 bln rupees * Govt to switch/buyback 500 bln rupee gilt in FY16 * FY16 divest mop-up aim 410 bln rupee * FY16 gross market borrowing pegged 6 trln rupees * FY16 net market borrowing pegged 4.56 trln rupees FY15 REVISED * FY15 real GDP growth seen at 7.4% * FY15 fiscal deficit seen at 4.1% of GDP * FY15 net resource transfer to states seen 3.38 trln rupee * FY15 disinvestment receipts revised to 264 bln rupees * FY15 gilt redemption seen 1.39 trln rupees * FY15 gilts buyback seen 63 bln rupees * FY15 gilts switch seen 320 bln rupees * FY15 fiscal deficit seen at 5.13 trln rupees MISCELLANEOUS * Inherited sentiment of doom, gloom * Aim to lay down policy direction * Govt relentlessly pursuing all-inclusive governance * Still have old thorns in our garden * World is predicting India's chance to fly * Presenting Budget in far more positive environment * Laying roadmap to up growth, boost invest

9 * Credibility of Indian econ re-established * Have embraced states as equal partners in econ growth * Have turned around econ, restored stability * Need quantum, not incremental, econ growth * Double-digit econ growth seen feasible * Aim housing for all by 2022 * Aim to build 60 mln toilets * India set to be world's fastest growing large economy * Over 125 mln families brought under Jan Dhan plan * Promoted non-adversarial tax regime * India 2nd best performing mkt among developing economies * Mindful of challenges but still optimistic * Restored macro economic stability * Direct benefit transfers to be hiked to 103 mln from 10 mln * bln rupees so far transferred for LPG subsidy * To significantly up divest target * Subsidies need to be well targeted * To divest stake in both sick and profit-making PSUs * Committed to rationalisation of subsidies * Jan Dhan, Aadhaar, mobile will aid in targeting benefits * To be mindful of fiscal discipline * Aim is senior secondary school within 5 km for every child * To ensure northeast region at par with rest of India * All our schemes must focus on removing absolute poverty * Rural, urban divide not acceptable * Need to ensure telecom connectivity to all villages * Must encourage growth in start-ups * Need to boost entrepreneurship * To launch self employment scheme with 10 bln rupee corpus * Atal pension plan launched * 1.5-bln-rupee allocation for Atal innovation scheme * New scheme to give physical aid to poor senior citizens * Set aside 150 bln rupee for short-term RRB fund * To increase access to formal credit system * 200 bln rupees for micro units development refinance agency * To create micro units development refinance agency Mudra * Plan to introduce public resolution of disputes bill * Propose law for public procurement * Up visa on arrivals to citizens of 150 countries vs 43 now * To work on restoring churches, convents in Goa

10 * Higher allocation to restore heritage sites * To allot another 10 bln rupee to Nirbhaya Fund * Introduce composite caps for foreign investments * To do away with distinction between FPI, FDI * Jewellers can obtain loans against metal accounts * To launch sovereign gold bond with fixed interest rate * New gold monetisation plan to offer interest on metal accts * To start work on Indian gold coin * To give 15 bln rupees for integrated child plan * Stated policy to avoid surprises in corporate tax policy * Allot 15 bln rupees for rural youth skill development plan * Allot 12 bln rupees for Delhi-Mumbai Industrial Corridor * Propose special assistance to Bihar, Bengal * To speed up optical fibre cable network of 750,000 villages * To reimburse states for digital India optic fibre costs * Making good progress on Digital India programme * Will not subject capital gains by FIIs to MAT * Propose subsuming education cess under central excise duty * GAAR will only apply prospectively after Apr 2017 * Rental income from REITs to have tax pass-through facility * To allow pass through taxation in alternative invest funds * To give 500 mln rupee for Renuka dam construction in Delhi * To set up NRI fund for Ganga river conservation * bln rupee allocation for Clean Ganga plan